Goods and Services Tax (GST) was enforced this year in July. Since there was no proper infrastructure to support the GST regime, the manual processing of refund application is primitive than VAT.

Due to lack of interface in place between the Goods and Services Tax network with the customs electronic date interchange (EDI) and the Directorate General of Foreign Trade (DGFT), the Centre is using ledger for manual records for refunds. West Bengal Finance Minister said.

In case of VAT system, there was no manual intervention in the entire process of filing of returns.

According to the report ‘Impact of GST on Exports‘ by the Parliamentary Committee headed by Naresh Gujral, the refund of Integrated Goods and Services Tax (IGST) paid on export goods and refund of Input Tax Credit (ITC) on goods exported under Letter of Undertaking (LUT)/ Bond in July, August, and September, 2017 was still pending.

The delay in disbursing refund means capital is blocked which could be between 15-20% of the working capital. Declining of the working capital would lead to losing of jobs by the workers.

Source: Money Control